While ANZ and Fisher Funds produced higher total net profits over the same period – about $19.6 million and $15.7 million respectively – both providers managed net margins of roughly 25 per cent, the Treasury report says.

However, the three other top six KiwiSaver providers could only muster net profit margins of between 5-7 per cent, according to the Treasury analysis.

AMP had the lowest net profit margin (5 per cent) with an NPAT of $11.7 million on income of $214 million. Meanwhile, Mercer and ASB both carved out a 7 per cent profit margin with NPATs of $3 million and $2.5 million, respectively, the Treasury study says.

“On closer inspection, it may be that high costs are a reason for lower ratios for AMP, ASB and Mercer. For example, ASB spent six times as much on distribution expenses year on year than the year previous,” the report says.

The Treasury study also analysed a handful of KiwiSaver schemes outside the big six, comparing their profitability to the average of the nine default providers.

According to the report, SuperLife KiwiSaver had a net profit margin of close to zero, while NZ Funds’ margin was about 10 per cent, compared to the default scheme average of 15 per cent.

Meanwhile, Smartshares, Milford, and Craigs Investment Partners all scored above the default average with net profit margins of about 20 per cent, 40 per cent, and 55 per cent respectively.

The Treasury report says while profitability varied considerably among the smaller schemes “providers such as Milford, Smartshares and Craigs Investment Partners have all found ways to be profitable”.

“These providers appear to take a niche approach and thus may be capturing customers and funds under management which the larger default providers are missing,” the study says. “This also illustrates that there is an element of contestability in the market, despite the market being moderately concentrated.”

However, the profitability findings do come with a caveat, with the report admitting to “possible deficiencies in this data”.

“… it is not always possible to accurately attribute the profits identified directly to the particular asset manager’s KiwiSaver business unit (and these could be attributable to other lines of business within the asset manager),” the report says.

“Only one provider – ASB – separates its different asset management revenue streams to reveal that 67% of the fee revenue received by ASB Groups investment limited is attributable to KiwiSaver.”

Overall, the Treasury report found that despite becoming more concentrated, KiwiSaver “appears to be working in an economically efficient and competitive manner”.